4 Ways I Increased My Credit Score Nearly 100 Points & How You Can Too
As much as I never wanted to believe it back when I was a young teen, I didn’t think that your credit score mattered if you had the cash. I had always heard the term, “money talks” and true enough it does but so does a good credit score. Now at the age of 27, I completely understand!
Over the last year, I’ve decided to work harder on one of my goals for my future. I would like to have a credit score of 850. It was time that I got serious not only because your credit score is important but because I recently got married and wanted to become a home owner.
My credit score has always been good since I started out on this journey, but my goal was to make it great. I started February of 2016 but as of this year (2018) I became even more serious about it. Here is what I did below to get closer to one of my many goals in life.
Payoff As much Debt as possible
After sitting down with my husband, I realized that we were knee deep in debt. It was a hard and a very stressful conversation to have but it needed to be done. We came up with a plan to pay off as much debt as we could. Well, more like I came up with the plan. He felt that with us being over $40,000 in debt that it was a bit too impossible to pay off so soon.
With me being who I am, after doing years of research, I KNEW that it was possible. So, what did I do might you ask? Before I answer, I don’t recommend for anyone to try this method, but it worked for me. 😊
I tested the waters by telling little white lies to get extra money out of him each month. No, I am NOT a gold digger, I am a GOAL digger! I have goals for us and I know just what it will take for us to reach them. Every month I would tell him that I need extra money for a bill. I started with our light bill. Our light bill has never been more that $85 per month but he never knew that. My lie was that our bill increased, and I needed extra money from him. To my surprise he bought it EVERY single time! When it comes to our bills, he doesn’t ask questions, he just gives.
Once we had a couple of credit cards and a loan paid, I told him the truth. He saw the light at the end of the tunnel and this made it easier for us to chunk as much money as we could towards our remaining debt!
The next thing that we decided to do was balance transfer what we could to save money on interest. I balance transferred all but about $50 because I did not want to close the credit card account that I’d had for the past 8 years. It was my oldest credit card and I knew that with closing the card, my credit score would take a huge hit.
I signed up for a credit card that offered 15 months 0% APR and a $0 balance transfer fee. From there I planned to pay off our remaining debt without the stress of added interest fees. As a bonus, the card came with rewards points. Not only am I saving money on interest, but I will be accumulating points as well. Your points do not accumulate when you have a balance transfer but rather when you are making a purchase. I plan on having my card paid in full well before the promotional period ends so that I can use it and take advantage of the rewards with 0% interest.
Don’t Close Credit Card Accounts
As I have already mentioned above, leave all old accounts open. Your credit score is determined by the following calculation:
· 35% payment history
· 30% amount owed
· 15% length of history
· 10% new credit
· 10% types of credit used
Closing old accounts with good payment history is the fastest way to decrease your credit score. It is ideal to use less than 30% of your credit card limit if you want your score to increase. The following step will help to get you there faster.
Automate a Small Bill
For me, that small bill was Netflix. Once I paid off a credit card, I set up automation for my Netflix to automatically be deducted each month. After 6 months I saw a major increase in my score. You can also set your account up for your credit card payment to be deducted from your bank account before interest starts to accrue.
Be sure to pay your credit cards off in full each month. There are so many myths out there that will tell you to let interest accrue and pay the minimum only. DON’T DO THIS! This is how I started out and before I knew it, I was head over heels. Yes, the minimum payment sounds so enticing but paying the minimum payment over the course of the next 7-8 years only results in a major over payment for you.
Credit Card Company $$$$, You-0.
Multiple Names, Addresses, Phone Numbers
Multiple name spellings, wrong addresses, and phone numbers often decrease your credit score. If you have a common name, your account could easily be merged with someone else in the world that has the same spelling.
From personal experience, not only did it have all the above on my credit report, it had my job information as well.
You are entitled to one FREE credit report per year. If you don’t know what is on your credit report then you can go to www.annualcreditreport.com. Order all three of your credit reports and dispute the errors. Whether it is a 1-point increase or a 30-point increase, every increase is a good increase when it comes to your score!
As for me, I am well on my way to an 850. Want to learn other ways to increase your score? Leave a comment below.